BP Expands Scope of $16 Billion Natural Gas Project in Oman

  • Additional phase pushes output to 1.5 billion cubic feet/day
  • Project has potential to produce gas for Oman for decades: BP

BP Plc and state-owned Oman Oil Co. agreed to expand an exploration and production sharing agreement of the Khazzan natural gas field to include a second development phase, at an estimated cost of $16 billion for the entire project.  

Block 61 will add 1,000 square kilometers (386.1 square miles) to the original 2,700 square kilometer area of development, BP said Sunday in an e-mailed statement. The project will produce 1.5 billion cubic feet of gas per day, or 40 percent of Oman’s current output. The new development requires final approval of Oman’s government and BP, which is expected in 2017, the company said. The reservoir is known to have “tight gas,” which is trapped in impermeable rocks and requires techniques including hydraulic fracturing to extract.

Oman, an exporter of liquefied natural gas to Spain, Japan and South Korea, is studying options to import LNG to help generate power. Domestic consumption jumped to 774 billion cubic feet in 2013 from 520 billion cubic feet in 2009, according to the U.S. Energy Information Administration. Oman imports gas via a pipeline from Qatar and is in talks to build a link with Iran across the Persian Gulf.

“Khazzan is a major resource with the potential to produce gas for Oman for decades," BP Chief Executive Officer Bob Dudley said in the statement.

The first phase of the project is expected to deliver gas in 2017 and the second will start in 2020. BP owns 60 percent of the block, with the remaining 40 percent held by Oman Oil. More than 325 wells are planned over 15 years.

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